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Is missing out on millions of dollars in revenue because its coffee prices are too low? That seems unlikely when the $5 cup of Starbucks is a staple of comedians mocking over-priced products. But, in reality, a small brewed coffee runs about $2 in the U.S. Now, a neuromarketing study in Germany suggests that the coffee giant may actually be under-pricing their product by a third and perhaps leaving profits on the table.

Would our brains prefer a higher price for coffee?

The provocative notion that we're not paying enough for a cup of java comes from scientist Kai-Markus Müller of Stuttgart-based The Neuromarketing Labs. Using EEG brain wave measurement, Müller's firm gauged the emotional reaction of consumers to different prices for a small cup of coffee, which costs €1.80 ($2.45) at a Stuttgart Starbucks.

The firm claims their results show that our brains reject prices that are too low or too high as being unrealistic, and says that the optimal price point for that small coffee in Stuttgart would be €2.40 ($3.25).

According to the study, the optimal price for a small coffee is 33% higher

According to Der Spiegel, this claim is buttressed by another experiment in which a set-your-own price vending machine on a college campus showed that students paid, on average, €.95 ($1.29) for a latte macchiato. When subjects were shown prices while their brain waves were being measured, an optimal price very close to that number was observed.

Starbucks shareholders might salivate at the idea that at least some of the firm's products could be priced substantially higher, but some caution is in order. For commodity items like coffee, lower prices tend to increase sales while higher prices discourage them. It would be quite unexpected for a higher price to increase unit sales for this type of product.

Furthermore, price comparison for brewed coffee is easy. Regular coffee drinkers know what a cup costs at different outlets. At least in my local Austin market, Starbucks is already at the upper end of a fairly narrow band of coffee prices. If they suddenly broke from the pack by raising their prices 33%, it's hard to imagine that traffic wouldn't shift to the competition.

Previous studies on pricing using fMRI brain scans by Loewenstein of Carnegie Mellon University and others did show a "pain of paying" effect from high prices, but didn't report a negative reaction for low prices.

I think this kind of "most liked price" analysis would work best for unique or new-to-the-world products. When introduced the iPad, for example, there was no reference point or competitive group to refer to. Studying consumer reaction to hypothetical price points might have been helpful. Of course, new and unfamiliar products present another problem - consumers have difficulty assigning a price (even subconsciously) if they don't know what value the product can deliver.

What do you think would happen to small (aka "tall" in Starbucks-speak) coffee sales if prices jumped by a third? Share your thoughts in a comment!